Business Analysis – Cannabis Industry Journalhttps://www.cannabisindustryjournal.com
Tue, 20 Feb 2018 17:02:53 +0000en-UShourly1NCIA’s Cannabis Business Summithttps://www.cannabisindustryjournal.com/event/ncias-cannabis-business-summit/
Mon, 19 Feb 2018 22:35:42 +0000https://www.cannabisindustryjournal.com/?post_type=event&p=9171Cannabis Business Summit & Expo was the winner of Trade Show Executive’s Fastest 50 Award in 2016, honoring the fastest-growing trade shows held in the U.S., and the winner of The Denver Post’s The Cannabist Golden Pineapple Award in 2016 for Best Business Event.

The annual summit, hosted by the cannabis industry’s only national trade association, returns to the Bay Area, the epicenter of the cannabis movement, to bring together more than 6,000 of the industry’s best and brightest minds.

Serious, like-minded entrepreneurs will convene for three days to learn how to grow their businesses and to achieve new levels of success in five all-encompassing educational tracks.

]]>Trump Administration-Israeli relations had the distinct whiff of cannabis to them in the first week of February. In a development potentially just as impactful as transplanting Israel’s capital to Jerusalem, it has now emerged that Israel’s president, Benjamin Netanyahu, has effectively scotched, at least temporarily, the country’s budding medical cannabis international export plans on the eve of finally launching them.

What this latest act of international “diplomacy” will eventually impact in the long run is anyone’s guess. There will, however, be winners and losers out of this situation, both now and in the long term.

Who Wins

On the surface (and to gentiles) it might be hard to understand why Israel effectively shot itself in the foot from a global perspective. But cannabis falls into complicated geopolitical and religious crevices at home too. Bibi, as Netanyahu is referred to by an international Jewish audience, has just scored political points over the Jerusalem showdown. Why rock the boat over a plant that has so recently gained legitimacy just in Israel? Remember the country only partially decriminalized recreational use in 2017. However, Israel has explored legal medical cannabis for quite some time, and Tikun Olam, the country’s flagship producer, has been growing cannabis since 2007.

Tel Aviv, Israel, where Tikun Olam has a dispensary

The quote from Netanyahu that has been widely circulated in the press says a great deal. “I spoke with Trump and he told me about his general opposition to the legalization of cannabis, and I’m not sure Israel should be the export pioneer.”

The fact that apparent encouragement of this policy came from the Israeli Finance Ministry only underscores the gravity of the impact for the losing side – and what was also probably threatened. Uruguayan pharmacies, who began distributing medical cannabis legally, walked away from customers last year after their banks were first informed by U.S. partners that they would either have to cut off the pharmacies or sever ties and access to the entire U.S. banking system. The cannabis trade was estimated to be worth between $1-4 billion per year to Israeli firms.

That said, this will also be a short-lived hiccup. Netanyahu apparently wants to see more medical evidence before moving forward with the plan. That means Israel will be in the race, but not for the next 12 to 18 months (minimum).

This will also not affect the cannabinoid-related export of intellectual property, where Israel has also led the cannabinoid discussion and for several generations now. Recipes, breeding instructions and even seeds cross borders more easily than plants. If anything, it will merely sharpen and shape the start up nation’s many budding cannapreneurs in a slightly different focus.

Canadian, Australian and a few other exporters also win. As of 2018, there will also be multiple European countries and EU-based firms importing and exporting (even if it is to each other).

Who Loses

The U.S. legal state cannabis movement has just been served a two fisted punch in the face by the White House. The Trump administration, in fact, has doubled down, in the space of less than five weeks, on its views towards cannabis legalization.

This also means that there will be no U.S. firms in any position to join a now global and exploding legitimate cannabis industry that stretches from the American hemisphere north and south of the U.S. itself. Not only will American producers not be able to get export approvals themselves from the U.S. government, but they may well be facing federal prosecution back home.

It will also be interesting to see whether this heralds any post-Cole memo prosecutions of the many Israeli entrepreneurs already operating in the U.S. state cannabis space. American and Israeli entrepreneurs with IP to protect are also the losers here, no matter how much this is being fought on the California front right now. That is just a state battle. IP must be protected federally.

Investors in the U.S. who had already been tempted to invest in the Canadian cannabis industry, now have little incentive to invest domestically or in Israel, no matter how big and bad California is. There is clearly budding (and less politically risky) competition elsewhere.

It goes without saying, of course, that this decision also hurts consumers – both recreational consumers and medical patients.

Bottom Line

This is clearly sabre rattling of the kind intended to make news both internationally and abroad. However, in direct terms, it will have little impact to the overall growth of the industry, no matter who is doing the growing, distributing and ex-im. The cannabis industry will also clearly not stop being a political business for the near term.

Look for prosecutions this if not next year in the U.S. – potentially in California or another high profile “impact” state. We might see pressure on Netanyahu at home, and probably from abroad as well, to get Israel into the cannabis game globally.

]]>https://www.cannabisindustryjournal.com/news_article/israels-cannabis-export-plans-evaporate-in-fire-and-fury/feed/0Hazard Analysis and Critical Control Points (HACCP) for the Cannabis Industry: Part 1https://www.cannabisindustryjournal.com/feature_article/hazard-analysis-and-critical-control-points-haccp-for-the-cannabis-industry-part-1/
https://www.cannabisindustryjournal.com/feature_article/hazard-analysis-and-critical-control-points-haccp-for-the-cannabis-industry-part-1/#respondTue, 13 Feb 2018 17:16:14 +0000https://www.cannabisindustryjournal.com/?post_type=feature_article&p=9150In the first part of this series, we’ll identify the key aspects of a hazard analysis.

Farm-to-fork is a concept to describe the control of food safety starting in the fields of a farm and ending with deliciousness in my mouth. The more that is optimized at every step, the more food safety and quality are realized. Farm-to-fork is not a concept reserved for foodies or “eat local” food campaigns and applies to all scales of food manufacture. HACCP is like putting the last piece of a huge puzzle in the middle and seeing the whole picture develop. HACCP is a program to control food safety at the step of food processing. In states where cannabis is legal, the state department of public health or state department of agriculture may require food manufacturers to have a HACCP plan. The HACCP plan is a written document identifying food safety hazards and how those hazards are controlled by the manufacturer. While there are many resources available for writing a HACCP plan, like solving that puzzle, it is a do-it-yourself project. You can’t use someone else’s “puzzle,” and you can’t put the box on a shelf and say you have a “puzzle.”

HACCP is pronounced “ha” as in “hat” plus “sip.”

(Say it aloud.)

3-2-1 We have liftoff.

The history of HACCP starts not with Adam eating in the garden of Eden but with the development of manned missions to the moon, the race to space in the 1950s. Sorry to be gross, but imagine an astronaut with vomiting and diarrhea as a result of foodborne illness. In the 1950s, the food industry relied on finished product testing to determine safety. Testing is destructive of product, and there is no amount of finished product testing that will determine food is safe enough for astronauts. Instead, the food industry built safety into the process. Temperature was monitored and recorded. Acidity measured by pH is an easy test. Rather than waiting to test the finished product in its sealed package, the food industry writes specifications for ingredients, ensures equipment is clean and sanitized, and monitors processing and packaging. HACCP was born first for astronauts and now for everyone.

HACCP is not the only food safety program.

If you are just learning about HACCP, it is a great place to start! There is a big world of food safety programs. HACCP is required by the United States Department of Agriculture for meat processors. The Food and Drug Administration (FDA) requires HACCP for seafood processing and 100% juice manufacture. For all foods beyond meat, seafood and juice, FDA has the Food Safety Modernization Act (FSMA) to enforce food safety. FSMA was signed in 2011 and became enforceable for companies with more than 500 employees in September of 2016; all food companies are under enforcement in September 2018. FSMA requires all food companies with an annual revenue greater than $1 million to follow a written food safety plan. Both FDA inspectors and industry professionals are working to meet the requirements of FSMA. There are also national and international guidelines for food safety with elements of HACCP which do not carry the letter of law.

The first step in HACCP is a hazard analysis.

Traditionally HACCP has focused on processing and packaging. Your organization may call that manufacturing or operations. In a large facility there is metering of ingredients by weight or volume and mixing. A recipe or batch sheet is followed. Most, but not all, products have a kill step where high heat is applied through roasting, baking, frying or canning. The food is sealed in packaging, labeled, boxed and heads out for distribution. For your hazard analysis, you identify the potential hazards that could cause injury or illness, if not controlled during processing. Think about all the potential hazards:

Biological: What pathogens are you killing in the kill step? What pathogens could get in to the product before packaging is sealed?

The hazards analysis drives everything you do for food safety.

I cannot emphasize too much the importance of the hazard analysis. Every food safety decision is grounded in the hazard analysis. Procedures will be developed and capital will be purchased based on the hazard analysis and control of food safety in your product. There is no one form for the completion of a hazard analysis.

A risk severity matrix. Many HACCP training programs have these.

So where do you start? Create a flow diagram naming all the steps in processing and packaging. If your flow diagram starts with Receiving of ingredients, then the next step is Storage of ingredients; include packaging with Receiving and Storage. From Storage, ingredients and packaging are gathered for a batch. Draw out the processing steps in order and through to Packaging. After Packaging, there is finished product Storage and Distribution. Remember HACCP focuses on the processing and packaging steps. It is not necessary to detail each step on the flow diagram, just name the step, e.g. Mixing, Filling, Baking, etc. Other supporting documents have the details of each step.

For every step on the flow diagram, identify hazards.

Transfer the name of the step to the hazard analysis form of your choice. Focus on one step at a time. Identify biological, chemical and physical hazards, if any, at that step. The next part is tricky. For each hazard identified, determine the probability of the hazard occurring and severity of illness or injury. Some hazards are easy like allergens. If you have an ingredient that contains an allergen, the probability is high. Because people can die from ingestion of allergens when allergic, the severity is high. Allergens are a hazard you must control. What about pesticides? What is the probability and severity? I can hear you say that you are going to control pesticides through your purchasing agreements. Great! Pesticides are still a hazard to identify in your hazard analysis. What you do about the hazard is up to you.

]]>Last week, Oregon Secretary of State Dennis Richardson published his office’s audit of The Oregon Liquor Control Commission (OLCC). The audit uncovered a number of inadequacies with the regulatory agency, most notably the problems with their tracking system, designed to prevent cannabis form being sold on the black market.

The report highlights the need for Oregon to implement a more robust tracking system, citing reliance on self-reporting, overall poor data quality and allowing untracked inventory for newly licensed businesses. The audit also found an insufficient number of inspectors and unresolved security issues. According to The Oregonian, the OLCC only has 18 inspectors, roughly one for every 83 licensed businesses.

Auditors also found inadequacies in the application system, saying the OLCC doesn’t monitor third-party service providers and doesn’t have a process in place for reconciling data between the licensing and tracking systems. The audit found there is a risk that decisions made for the program could be based on unreliable data. It also found a risk of unauthorized access to the systems, due to a lack of managing user accounts.

Oregon Secretary of State Dennis Richardson

This audit’s publication is very timely. Most notably because U.S. Attorney Billy Williams, who called Oregon’s black market problem “formidable,” convened a summit this week to examine how Oregon can prevent cannabis being exported to other states. According to the Oregonian, Williams said Oregon has an “identifiable and formidable overproduction and diversion problem.” The audit’s findings highlighting security issues are also very timely, given that in the same week, Oregon’s neighbor to the North, Washington, experienced a security breach in its own tracking system.

The problems with the Oregon tracking system’s security features are numerous, the audit says. They found that the OLCC lacks a good security plan, IT assets aren’t tracked well, there are no processes to determine vulnerabilities, servers and workstations not using supported operating systems and a lack of appropriately managing antivirus solutions. “Long-standing information security issues remain unresolved, including insufficient and outdated policies and procedures necessary to safeguard information assets,” reads the report’s summary.

The audit proposes 17 recommendations for the state to bolster its regulatory oversight. Those recommendations intend to address undetected compliance violations, weaknesses in application management, IT security weaknesses and weaknesses in disaster recovery and media backup testing. You can read the full audit here.

]]>https://www.cannabisindustryjournal.com/news_article/audit-finds-oregon-lacking-regulatory-oversight-and-proper-security/feed/0Head of German Police Union Calls for Official Decriminalization of Cannabishttps://www.cannabisindustryjournal.com/news_article/head-of-german-police-union-calls-for-official-decriminalization-of-cannabis/
https://www.cannabisindustryjournal.com/news_article/head-of-german-police-union-calls-for-official-decriminalization-of-cannabis/#respondMon, 12 Feb 2018 19:18:14 +0000https://www.cannabisindustryjournal.com/?post_type=news_article&p=9143Andre Schultz calls for decriminalization and states that recreational reform is on the horizon.

]]>Facing the same conundrum as police everywhere after the start of a medical market only this time with federal authorization, the head of the German police union has called for recreational use of cannabis to also be decriminalized.

On the first Monday of February, the head of the BDK – the Association of German Criminal Officers told The Bild (sort of like the New York Post but a national “tabloid” here) that his group, the largest organized union of German police officers, favoured a change in German cannabis laws. Andre Schulz argued that the current laws stigmatized those charged with minor amounts and created opportunities for “criminal careers to start.”

“The prohibition of cannabis has historically been seen as arbitrary and has not yet been implemented in an intelligent and effective manner,” says Schulz. “My prediction is that cannabis will not be banned for long in Germany.”

Why this sudden pronouncement? It is actually not all that sudden and has been long in the offing. One of the largest contingents at both the ICBC and the IACM last year (the biggest cannabis-focussed business and medical conferences in Germany) were police officers from California and Deutschland. And all were singing the same tune.

André Schulz, chairman of the BDK

However beyond a realistic assessment of changing political reality, there are actually several other concrete reasons for not only the statement but the timing of it. In a country where patients can now pick up bud cannabis from the local apotheke (which is that easy for some, although it is still hard for most), the police have the unappetizing prospect of potentially arresting patients. On top of that, the idea of someone being arrested for CBD flower (rather than THC) gives the German polizei plenty of pause. Not to mention that they face this possibility at a time when many of them potentially could be patients themselves (or their families). The idea of arresting an activist in this situation is also one the police do not relish. Legalization rallies here get formal police protection when they march. Ask the average beat cop what they think about cannabis legalization and they tend to roll their eyes.

Then there is this: In stark contrast to the wars over prescribing medical cannabis at a state level in California in the late 90’s, here in Germany, there is a cultural commitment to the concept of sick people having a moral and civil right to obtain the medication they require. The idea of the police arresting them in the process of obtaining the same or because they might be recreational users, is as antithetic to core German sensibilities as the concept of Donald Trump as U.S. President. So is the idea of branding someone a “criminal” if not “drug user” for possession of a drug that is now used as medicine in Germany.

As has been rumoured for some time now, one of the few things that all political parties in Berlin can agree on is a change on the current cannabis laws.As a result, the very idea of both arresting the sick or labelling someone for the rest of their life with a police record for a drug “crime” that nobody considers as such anymore, causes a shock to the system. In many ways, German culture is far more conservative than the U.S. On another, there is a deeply humanistic, liberal strain to German life that also allows nudity, alternative healthcare and lifestyles to flourish (and not just all in Berlin). The current situation over cannabis, in other words, is becoming a political and legal embarrassment even to the beat officers who have to implement such laws.

And then of course there is this: One of the country’s top judges, Andreas Müller, a man well-known to the senior level of BDK, has recently written a book about the horrible situation that faces his own brother because of drug laws in Germany called “Kiffen und Kriminalität.”

Cannabis also falls into this crevice of cultural questioning if not the national zeitgeist of the moment, in multiple ways. It is, beyond the stigma, a natural medicine that is now federally recognized as such and one that the statutory health insurers (public healthcare) is required to cover. No matter that only 64% of submitted rezepts have been formally approved 11 months into Germany’s foray into this world. There are doctors writing them. And there are insurers picking up the tab.

It also means that there are at least 10,000 legal medical cannabis patients that der polizei have no wish to bother. And 10,000 German patients, who look the same as anyone else, are already too many legal users for current laws to stay in place.

Decriminalization, Cultivation & Changing Culture

There are some who say that Europe is “backwards” if not slower than the United States. Certainly those who experience German culture as Auslanders are struck by the procedural requirements of everyday life. Things do move slower here.

However when things do move, they are determinative shifts. Right now, it is impossible to live in the country and not be aware that Kiffen – a slang term for pot auf Deutsch – is legalizing in the U.S., Canada, the rest of Europe and of course other places. Further, Germans with their distrust of bureaucracy and authority and certainly currently rebellious mood, are looking to a way forward for the country in a sea of uncertainty both locally and regionally not to mention globally on any issue, no matter how “symbolic.”

As has been rumoured for some time now, one of the few things that all political parties in Berlin can agree on is a change on the current cannabis laws. The idea of decriminalization, now suggested by one of the country’s top cops, is a natural solution to political deadlock, if not a changing society.

The idea that other countries are also moving on this topic, from the now Brexiting UK to France next door, not to mention all the cultivation focused reform in many European countries, seems to indicate that decriminalization and even recreational reform are coming and now officially on the schedule, and not just to Germany but the entire continent.

]]>On February 8th, Peter Antolin, the deputy director for the Washington State Liquor and Cannabis Board (WSLCB), sent an email to licensees explaining why the transition to their new traceability system was disrupted. Last Saturday, someone gained access to the sensitive information in Leaf Data Systems, the state’s traceability software that is powered by MJ Freeway.

“A computer vulnerability was exploited on Saturday, allowing unauthorized access to the traceability system,” Antolin told licensees in the email. “There are indications an intruder downloaded a copy of the traceability database and took action that caused issues with inventory transfers for some users. We believe this was the root cause of the transfer/manifest issue experienced between Saturday and Monday.”

The email goes on to say that no personally identifiable information was available to the ‘intruder,’ but some sensitive information was clearly accessed. That data includes route information of manifests filed between February 1st and 4th as well as transporter vehicle information including VIN, license plate number and vehicle type, according to the email.

That email leaves much to be desired. For one, they do not exactly have a solution, instead trying to alleviate licensees’ worries with a hollow inanity full of meaningless jargon: “The WSLCB and MJ Freeway continue to implement several strategies to prevent future vulnerabilities to future intrusions,” reads the email. “This includes full logging and monitoring and working with third-party entities. Since this remains an active investigation, details on security are not publicly available.” However, today the WSLCB is hosting a webinar where Peter Antolin, their IT division, the MJ Examiners unit and enforcement will be available to answer questions, according to the email.

This is by no means the first security breach that Washington and MJ Freeway have suffered. In May of 2017, Washington originally selected Franwell’s METRC as the contract partner for their traceability software system. Less than a month later in June of 2017, after a mistake in the selection process, Washington selected MJ Freeway instead of Franwell for the traceability contract. Three days later, MJ Freeway’s source code was stolen and published online. Then in September, Nevada cancelled their contract with MJ Freeway after a security breach, their services crashed in Pennsylvania and Spain, and in October it became clear that the company could not meet the October 31 deadline for their new Washington contract.

In November of 2017, BioTrackTHC, the company that held the previous contract for Washington’s traceability software, helped the state through the transition period with a temporary Band-Aid solution to hold the state over until January of 2018. A month after they expected to implement the new MJ Freeway system, the latest security breach occurred this week and disrupting the rollout yet again.

At the end of the email Antolin sent to licensees yesterday, he says there will continue to be attempts to breach the system’s security. “The bottom line is that this incident is unfortunate,” says Antolin. “There will continue to be malicious cyberattacks on the system. This is true of any public or private system and is especially true of the traceability system.” This begs a few questions: why aren’t we hearing about this kind of security breach in other states’ traceability systems? What are other companies doing that prevents this from happening? Why does this keep happening to MJ Freeway?

]]>Right now the map of Europe, from a cannabis cultivation perspective at least, is shaping up to be very much like a game of Risk. Throw the dice, move your armies (or more accurately line up your financing), and apply for federal import and cultivation licenses.

In the process, all sorts of interesting strategic plays are popping up. And as a result, here is a new and actually pretty cool “alternative” reality that is easy to verify in several different ways. Medical cannabis is being cultivated in multiple countries across Europe as of 2018, however unbelievable this was even four years ago. Even though it is still cleary just early days. And those cultivators are already international, operating across federal jurisdictions in Europe and across both the Atlantic and Pacific oceans.

With all the excitement and attention paid to the American hemisphere and the European moves of big Canadian LPs (and they are pretty amazing), there are still other moves afoot that are absolutely of note. Specifically, Australian firms and MGC Pharma in particular, have been moving steadily to establish both distribution and cultivation presence on the ground in Europe.

CannEpil, the company’s first pharmaceutical-grade medical cannabis product for the treatment of refractory epilepsy.

The latest news? MGC’s production facility in Slovenia was officially inspected by authorities and issued an interim license for its production plant in January, before presumably being given a green light of approval permanently. The company is also moving forward with the production of CannEpil, the company’s first pharmaceutical-grade medical cannabis product for the treatment of refractory epilepsy.

Refractory epilepsy affects about 30% of all those who suffer from the condition. Refractory is one of those words however, that hides its real meaning. Translation for those without an MD? This is “drug resistant” epilepsy. Resistant to all drugs before, of course, except cannabinoids.

And that is a welcome relief for patients domestically and throughout Europe. It is also a note to investors looking for savvy Euro plays right now.For all manufacturers now considering entering this market, this is a complicated environment to begin negotiating

This is a major win for MGC. Not to mention a vibrant medical market. No matter where specialty drugs are now going to be sourced from.

A Treatment-Driven “Branded” Pharma Market

What more traditional American pharmaceutical companies have known for a long time (certainly since the 1950’s) is now a fact also facing all cannabis brands coming to the European market and Germany in particular. The regulatory environment is hostile to the extreme for Auslanders in particular. Specifically, the development of “branded” or “name brand” drugs runs economically and philosophically counter to the concept of public health insurance itself even as their market accessibility is required by the same. This is even more the case for foreign firms with such ideas.

Here is the problem. Name brands are expensive. They are also usually outlier drugs for specific, relatively rare conditions. This is also the place where new drugs enter the market, no matter what they are.

In an environment where the government negotiates bulk contracts for common drugs and these can be bought at every apotheke (pharmacy) for 10 euros and a doctors rezept (prescription), the chronically ill and those with drug resistant conditions are left out of the discussion. They face steep and usually inaccessible bills up front for all meds not in bulk purchase categories. And that as of last year in Germany specifically, includes cannabis. That is the case even though technically the government is now buying cannabis in bulk and making purchase commitments to foreign companies for the same. Insurance companies, however, are still forcing patients to pay the entire out of pocket cost up front and wait to reimbursed.

“Generic” Brands For Off label Chronic Conditions

However medical cannabis is clearly not just another drug. Cannabis falls on both sides of every fence in this discussion.

The first problem is that the providers (importers and soon to be domestic cultivators) are private companies. All of them are foreign helmed at this point, with a well-developed bench of branded products. That makes all cannabis drugs, oil and flower, by definition, fall into the “expensive” branded category immediately. The German, Italian, and Danish governments appear to be now negotiating bulk buys during a licensing season that is well on the way to domestic cultivation too. That alone will affect domestic prices and new products. But again, this is now several years behind other countries – notably MGC in Slovenia, Tilray in Portugal, all things now afoot in Denmark and clearly, Greece.

Next, cannabis’s status as a still imported, speciality, semi-trial status in the EU means it is in the most restricted categories of drugs to begin with (no matter the name or strength of the cannabinoid in particular). And because it can be bought as bud, in an “unprocessed” form as well as processed oils or other medicine, this is throwing yet another spanner into the mix.

Look for distribution deals all over Europe as a result, starting with PolandThen there is this wrinkle. Cannabis (even CBD) is currently considered a narcotic within the EU and even more specifically the largest continental drug market – Germany. The German regulatory system in particular, also imposes its own peculiarities. But basically what this means in sum is that the legal cannabis community including distributors and pharmas at this point, have to educate doctors in an environment where cannabis itself is a new “brand.” Who manufactures what, for the purposes of German law, at least, is irrelevant. It is what that drug is specifically for that matters.

For all manufacturers now considering entering this market, this is a complicated environment to begin negotiating. This is sure not how things are back home.

What this also means is that low cost, speciality cannabis products will continue to be imported across Europe for the German and other developing, regulated sovereign markets here as doctors learn about cannabis from condition treatments. And that is what makes the news about MGC even more interesting.

Look for distribution deals all over Europe as a result, starting with Poland. And, despite the many well-connected and qualified hopefuls from Canada, a little competition in the German market too.

MS is the only “on-label” drug at present for cannabis treatment in Germany. As a result, particularly when it comes to paediatric treatment for drug resistant epilepsy, this is the kind of strategic presence that will create a competitive source for highly condition-branded medication for a very specific audience of patients. It is also what the German market, for one, if not the EU is shaping up to be at least in the near term.

As this interesting abstract from 2006 clearly shows, this kind of epilepsy is also high on the German radar from a public policy and healthcare-cost containment perspective. The costs of treatment per patient were between 2,600 and 4,200 euros for three months a decade ago, and not only have those risen, but so have the absolute number of people in similar kinds of situations.

Further, with indirect costs far higher than direct costs including early retirement and permanent semi disability, MGC’s market move into an adjacent (and cheaper) production market might be just what the German doctors if not policymakers now looking at such issues, will order.

]]>RJ Palermo has joined Innovative Publishing Co. (IPC) as Director of Sales – Events. In this newly created position at IPC, RJ will be managing the business development activities of the company’s food safety medical device and cannabis industries, working on both conference sponsorships and booth sales.

RJ will work side by side with Marc Spector, Director of Sales – Publishing. Marc had been responsible for all events and publishing sales, as well as for the year-after-year growth in these areas. The addition of RJ to the IPC team will support the company’s growth in sponsorship and exhibit sales, and allows Marc to continue supporting growth in digital advertising sales across all three of IPC’s digital publications, Food Safety Tech, MedTech Intelligence and Cannabis Industry Journal.

For many of IPC’s customers who leverage IPC’s unique position of conference sponsorships and digital advertising, they will be serviced in tandem by Marc and RJ.

“We saw a 25% growth in total revenue in 2017 and see tremendous growth potential in the three industries that we serve. Bringing RJ onto the team provides us the bandwidth to capitalize on the opportunities facing us,” said Rick Biros, president and co-founder of IPC. “Plus, RJ’s years of B2B conference and trade show management experience complements the IPC team’s current skill sets.”

RJ has more than 20 years of media, conference and agency experience. He was most recently a biopharmaceutical equipment contributor for the Pharma’s Almanac publication, and delivered several branding and research projects for pharmaceutical and medical device contract manufacturers. For 17 years RJ served as vice president of Interphex, the largest pharmaceutical manufacturing event in North America and was a key contributor of a successful launch of Medical Device Puerto Rico, which created the largest life sciences event in the Caribbean. RJ is an avid NY sports fan, and enjoys working out and spending time with his family and friends. RJ is married to his wife Beth, has a daughter Nora and dog Beau, and resides in Norwalk, CT.

]]>https://www.cannabisindustryjournal.com/news_article/rj-palermo-joins-innovative-publishing-company-team/feed/0Jeff Sessions’ Latest Moves Should be a Wake-Up Call for the Cannabis Industryhttps://www.cannabisindustryjournal.com/column/jeff-sessions-latest-moves-should-be-a-wake-up-call-for-the-cannabis-industry/
https://www.cannabisindustryjournal.com/column/jeff-sessions-latest-moves-should-be-a-wake-up-call-for-the-cannabis-industry/#commentsTue, 06 Feb 2018 20:14:13 +0000https://www.cannabisindustryjournal.com/?post_type=column&p=9117The rescinding of the Cole memo does not suggest the sky is about to fall for the U.S. cannabis industry, but it should be a wake-up call for those who have been playing fast and loose with their business operations.

]]>The legal cannabis industry was recently rocked to its core by the announcement that Attorney General Jeff Sessions would be rescinding the so-called “Cole memo” and several other Obama-era legal directives suggesting the federal government would leave state-by-state cannabis reforms more or less alone. Suddenly, it seemed the entire cannabis movement was in jeopardy. Laws legalizing medical and recreational cannabis could be at risk. A booming industry predicted to be worth $50 billion annually by 2026 could instead be going down in flames.

Here’s the good news: As a business transactions attorney who’s been working in the cannabis industry for eight years, I don’t see any cause for panic. The Cole memo and the other directives the Justice Department are rescinding were not laws, orders or even legal precedents – they were simply legal guidance, and murky at that. The memos provided guidance to federal prosecutors regarding cannabis enforcement under federal law, suggesting that federal prosecutors not focus resources on state-legal cannabis operations that weren’t interfering with other federal priorities, such as preventing the distribution of cannabis to minors and preventing revenue from the sales from going to criminal enterprises, gangs and cartels. Yes, federal prosecutors could take Sessions’ recent moves to mean it’s open season on medical and recreational cannabis businesses. But with medical cannabis programs of one form or another up and running in 29 states and Washington D.C., and recreational cannabis now legal in eight states and Washington D.C., dismantling the entire legal cannabis industry would require a Herculean federal effort that would come at the expense of a cornerstone of the Republican Party now in power: The vital importance of states’ rights.The best way to stay on top of those rules? Form relationships with your state program regulators

In other words, I don’t see the termination of the Cole memos as the end of the nascent cannabis industry. But I do think the development should be a wake-up call for all those people in the cannabis industry who have been playing fast and loose with their business operations. After all, if federal prosecutors do decide to make examples of certain cannabis operations, they’re going start with those who are not operating within the confines of the applicable state rules and regulations. Any business that smells even slightly of tax evasion, interstate trafficking or the allocation of cannabis-derived revenue to benefit a criminal enterprise will end up at the top of that target list.

So how should well-meaning cannabis operators stay off the feds’ radar? Simple: Follow all the rules.

Unless you want orange to be your new black, you can’t afford to be sloppy with your business structure and financial records.For starters, you need a CPA who’s not just at the top of their game, but who also understands the very specific – and potentially debilitating – nuances of cannabis-specific tax liabilities. That’s because thanks to a quirk in the tax code called IRS section 280E, cannabis companies are utterly unique in that they are not allowed to deduct expenses from their business income, save for the costs of goods sold. You want an accountant who thoroughly grasps this issue, so they can help you plan for and (to the extent possible) minimize your tax liability. And you want to address such matters before you start to realize positive revenue, so you’re ready to handle an effective tax rate that can be upwards of 70 percent. Last I checked, the IRS doesn’t consider “But I can’t afford to pay my taxes!” a valid excuse.

Along the same lines, you need a business corporate attorney who’s well-versed in the world of cannabis. That’s because while it might seem exciting to jump headlong into the cannabis green rush, you’re not going to get very far if you don’t deal with the boring stuff first. I’m talking about start-up financing strategies, business contracts and agreements, profit and loss forecasts, cash-flow analysis, and long-term financial plans. Properly structuring your business from the get-go isn’t just important if you ever plan to seek capital or sell your business. It’s also necessary if you want to keep the feds happy. In other industries, regulators might cut first-time business owners some slack. Not so in cannabis. Unless you want orange to be your new black, you can’t afford to be sloppy with your business structure and financial records.

AG Jeff Sessions (left), the man responsible for the recent uptick in worries

Finally, make sure you’re playing by all the cannabis rules, regulations and requirements of your state and jurisdiction. While this suggestion might seem like a no-brainer, far too often cannabis brands hire hotshots from Fortune 500 companies who don’t know anything about cannabis regulations and how they apply to their business.

The best way to stay on top of those rules? Form relationships with your state program regulators. Here in Arizona, I am in constant contact with our regulators discussing nuances and new business concepts for which the rules are unclear, convoluted or simply silent. Working with the enforcers might not come naturally to many folks in the cannabis business, but we’re dealing with a new and evolving industry where there’s little or no business, regulatory or judicial precedent. We’re all in this together.

It’s exciting to be at the bleeding edge of a bold and booming new industry like cannabis, but to do so safely and legally, cannabis industry pioneers need to make sure they’re striking the right balance between daring innovation and sensible business security.

We shouldn’t expect Jeff Sessions to launch a new army of prohibition agents around the country to kick down doors of cannabis businesses. But it wouldn’t be a bad idea for cannabis entrepreneurs to start acting like he might.

]]>https://www.cannabisindustryjournal.com/column/jeff-sessions-latest-moves-should-be-a-wake-up-call-for-the-cannabis-industry/feed/1Growing Pains a Month Into California’s Market Launchhttps://www.cannabisindustryjournal.com/news_article/growing-pains-a-month-into-californias-market-launch/
https://www.cannabisindustryjournal.com/news_article/growing-pains-a-month-into-californias-market-launch/#respondWed, 31 Jan 2018 17:52:11 +0000https://www.cannabisindustryjournal.com/?post_type=news_article&p=9105California’s new market is adjusting well to the changes, but side effects of the regulations are beginning to show.

]]>For about a month now, California’s adult use market has been open for business and the market is booming. About thirty days into the world’s largest adult use market launch, we are beginning to see side effects of the growing pains that come with adjusting the massive industry.

Consumers are also feeling sticker shock as the new taxes add up to a 40% increase in price.While the regulatory and licensing roll out has been relatively smooth, some municipalities are slower than others in welcoming the adult use cannabis industry. It took Los Angeles weeks longer than other counties to begin licensing dispensaries. Meanwhile, retailers in San Diego say the first month brought a huge influx of customers, challenging their abilities to meet higher-than-expected demand.

Businesses are struggling to deal with large amounts of cash, but California State Treasurer John Chiang may have a solution in store. Yesterday, his department announced they are planning to create a taxpayer-backed bank for cannabis businesses.

In the regulatory realm, some are concerned that a loophole in the rules allows bigger cultivation operations to squeeze out the competition from smaller businesses. The California Growers Association filed a lawsuit against the California Department of Food and Agriculture to try and close this loophole, hoping to give smaller cultivators a leg up before bigger companies can dominate the market.

The Bureau of Cannabis Control (known as just “The Bureau”) began holding meetings and workshops to help cannabis businesses get acquainted with the new rules. Public licensing workshops in Irvine and San Diego held last week were designed to focus on information required for licensing and resources for planning. The Bureau also held their first cannabis advisory committee meeting, as well as announcing new subcommittees and an input survey to help the Bureau better meet business needs.

On the lab-testing front, the state has phased in cannabinoids, moisture content, residual solvent, pesticide, microbial impurities and homogeneity testing. On July 1, the state will phase in additional residual solvent and pesticide testing in addition to foreign material testing. At the end of 2018, they plan on requiring terpenoids, mycotoxins, heavy metals and water activity testing as well.